Richard B. Freeman and Joseph R. Blasi post on PBS Newshour:
Citizen ownership, often demonized as “socialist,” has a pedigree dating to the American Revolution. “Scene at the Signing of the Constitution of the United States,” oil on canvas by Howard Chandler Christy, 1940, via Wikipedia Commons.
Paul Solman: “Using tech playbook, oil drillers shower employees with stock.” So read a recent article in Reuters.
But as Joseph Blasi of Rutgers and Richard Freeman of Harvard emphasize in Friday’s post, worker ownership is as new as fracking, but as old as America itself. George Washington, a slave owner, remember, believed that broad-based worker ownership would ensure “the happiness of the lowest class of people because of the equal distribution of property.”
John D. Rockefeller encouraged worker ownership. George Eastman (of Eastman Kodak) helped invent stock options.
These and other rather surprising facts are in Blasi, Freeman and co-author Doug Kruse’s new book, “The Citizens Share,” which Freeman told me about recently when I interviewed him for the NewsHour.
“The Alternative American Dream: Inclusive Capitalism.” That was the headline of an extremely popular post on our Making Sen$e Business Desk by long-time worker ownership activist Chris Mackin this summer. Now, Freeman and Blasi, in a sense, follow up.
Richard B. Freeman and Joseph R. Blasi: The fact is indisputable: productivity — output per worker — nearlydoubled over the past 30 years. Yet the real pay of most workers increased much more slowly, and the hourly pay of many groups of non-supervisory workers barely budged at all. So what happened to the gains of higher productivity?
They showed up in an increased share of income accruing to owners of capital and in the pay of top earners, whose compensation consists disproportionately of — guess what? — stock options and stock grants that give them a share of the increased growth and income that comes from capital. The net result of this shift has been the well-documented increase in the wealth and income of a small number of Americans and American families, while the income and wealth of most Americans has grown little, if at all.
In 1956, the Employee Stock Ownership Plan (ESOP) was invented by economist and corporate lawyer Louis O. Kelso as a way for the workers of a privately owned newspaper chain to buy out its owners. In 1974, as part of the Employee Retirement Savings Act (ERISA), Congress instituted tax incentives for corporations to grant workers shares of stock.
In other words, while the idea of reducing inequality and improving economic efficiency by giving workers a greater ownership stake in their firm may sound radical in the context of today’s partisan battles in Washington between capital and labor, history shows that it is in fact firmly rooted in U.S. tradition. In a world in which capital’s share of income has risen, and top earners gain much of their “labor income” from capital, it is far more sensible to expand the proportion of Americans with capital income than to engage in destructive ideological battles pitting capital against labor.
Louis Kelso was my partner in our advocacy firm Agenda 2000 Incorporated (1968-1978), an advocacy consultancy for expanded private sector individual ownership by employees of corporations and citizens. Norman Kurland, who now serves as President of the Center for Economic and Social Justice (www.cesj.org) was also a member of our team of advocates for economic justice.
Our current set of proposals for reforming the system are spelled out in the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm. See the full Act at http://cesj.org/homestead/strategies/national/cha-full.pdf.
The proposals will provide equal opportunity for EVERY American, including those employed by corporations and those not employed by corporations or not employed at all, to acquire personalized ownership in FUTURE wealth-creating, income-producing productive capital economic growth using capital credit loans repayable out of the FUTURE earnings (“savings”) of the investments, without having to pledge past savings or reduce consumption or current income.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
http://www.pbs.org/newshour/businessdesk/2013/11/what-the-founding-fathers-beli.html
